Obama’s Health Care Cuts Don’t Worry Advocates -- Yet

Health care advocates were worried that President Obama might announce that he was planning to make some drastic cuts in health care in his deficit speech Monday. But while there are specific cuts of concern to advocates, they were pleased with the president’s overall defense of health care services, and his commitment to raise the revenues needed to sustain key programs like Medicaid and Medicare.

President Obama outlined plans for deficit reduction that would include cuts to Medicare and Medicaid. He said his proposals would save the federal government $320 billion ($248 billion in Medicare savings and $72 billion in Medicaid) over the next decade. How can this be achieved without hurting those enrolled in the two programs?

First of all, it’s important to note what President Obama is not proposing. He is not advocating the wholesale restructuring and/or dismantlement of the Medicare and Medicaid programs, as proposed by Congressional Republicans. He is not proposing to raise the eligibility age of Medicare, or make other major changes to eligibility or benefits in either Medicare or Medicaid.

So are you saying that the president is not proposing to make major health care cuts?

As opposed to Congressional GOP proposals, the president is seeking to prevent radical changes in Medicare or Medicaid (called Medi-Cal in California) by instead raising revenues. For example, allowing some of the Bush tax cuts for the wealthy to expire.

If we are seeking to reduce the deficit in the long term, it’s appropriate to ask that everyone share in the solution, not just low- and middle-income families, but also the folks who have benefited the most.

But even President Obama’s proposal is weighted toward cuts, 3 to 1. In health care, some of the cuts are to find more savings in the health system. For example, one of the bigger budget solutions is to get the same discount for prescription drugs in Medicare as we do in Medicaid. There are other solutions that smartly seek to find savings in Medicare and Medicaid.

But there are also other parts of the president’s proposal that would simply push more of the cost of care from the federal government onto families or states. That’s not a solution—it’s simply a shift, that makes patients and taxpayers pay more in the end.

So while we are happy that the president is protecting the basic core of Medicare and Medicaid, we are concerned about the impact of specific cuts, whether cuts to prevention and public health, some cost increases to certain Medicare beneficiaries, or some of the Medicaid cuts that will fall on states.

Some 7.7 million Californians are currently enrolled in Medi-Cal. The state in March authorized cuts in the program. What could it mean to Californians if more cuts are made to the program? Would even more doctors decline to accept Medi-Cal patients?

One of the reasons we are concerned with shifting costs to states is that states are already seeking to cut Medicaid with their existing funding.

Yes, there were cuts made in March to Medi-Cal, including a 10 percent rate cut to providers (which will more than likely cause more doctors to decline Medi-Cal patients); a cap on the number of doctor visits allowed; and an increase in cost-sharing on a very low-income population. These cuts are currently pending federal approval, partly because they bump up against the minimums allowed by federal law.

So the cuts made in March are not part of this package and are really part of their own timetable. But it shows the irony—the federal government will hopefully and appropriately reject many of the state’s proposed cuts as too severe, but at the same time these deficit negotiations may also create other problems and pressures to cut even more.

What in Obama’s announcement today to cut health care costs most worries you and why? What should the public most worry about and why?

The biggest concern is not what is in the president’s proposal, but what might come out of a negotiation with the Congressional Republicans. The president has said he would veto any proposal that cuts Medicare without a revenue increase on high-incomes. But given what the GOP has proposed, they may demand significant cuts if they were ever to agree to any deal on taxes.

The Affordable Care Act (ACA) was supposed to expand Medicare and Medi-Cal. Its goal was to expand Medi-Cal enrollment by 2 million in 2014, particularly by including low-income single adults. If Obama’s plan to cut funding to these programs is approved by Congress, what happens to the “Maintenance of Effort” assurance in the ACA? It seems counter-intuitive to cut funding to programs you want to strengthen.

Nothing in the president’s plan would impact the Affordable Care Act’s expansion of Medicaid, or the “maintenance of effort” requirements that are in place. That said, the Congressional Republicans have been clear about their desire is to repeal the federal health reform in its entirety, and in pieces. The president has appropriately stood firm on this point in the last few budget negotiations.

Obama said he wants to raise premiums and out-of-pocket costs for wealthier seniors enrolled in Medicare. But elder advocates are concerned that there could at some point be what they call a “downward creep” – that the middle-class seniors could also find themselves paying more. Could that happen?

We are always concerned about having people pay more for health care, especially when it could be a financial barrier to getting the care and treatment a patient needs.

It seems that health care advocates like you are not as shaken by what the president said Monday about health care cuts.

We were relieved that the savings sought from Medicaid was less than originally feared, given how sparsely funded it currently is. But the cuts that remain continue to be cause for concern. The proposal would change the formula by which the federal government reimburses states for much of the cost of Medicaid, and there’s a real argument for making those formulas simpler and fairer. Depending on exactly the formula, California could win or lose. But the issue is that this recalculation would also seek to save the federal government over $16 billion—which means some combination of states may have to pick up the difference.

But if the formula was crafted that way, would cash-strapped California afford to take on more financial burden?

California would not be in a position to make up the difference — I’m not sure many states would be — and as a result California would have to make up the difference through cuts or tax increases.